The Financial Times recently published a brief profile of Liu Yandong, the Politburo’s only female member and unlikely contender for the Politburo Standing Committee. I applaud Leslie Hook at FT for writing an article that not only sheds light on Ms. Liu but also the CCP promotion system. Although her appointment is unlikely (especially given that the PSC will probably shrink to seven members), the following observations apply to the entire CCP:

In the same way that premier Wen Jiabao – known as “Grandpa Wen” – is the comforting public face of the Communist party when natural disasters strike, her carefully managed public appearances reveal a knack for appealing to the masses.

And then further down the page:

The Communist party rewards officials who keep a low profile and take few risks, an art that Ms Liu has mastered. So, it is almost impossible to deduce what policies she – or any of the other potential new standing committee members – advocate.

CCP leaders and the entire CCP promotion system value empathy as artifice, an opaque decision-making process, and a complete lack of imagination, creativity, or risk-taking. I can’t imagine attributes less suitable to tackle China’s problems. The economy isn’t just slowing down–it is also in need of a complete overhaul if it is to successfully transition to the innovative, developed economy that the CCP wants to achieve. But leaders with personal qualities such as these don’t reshape an entire system–they tinker along the edges while everything crashes down upon them. That’s a danger to China, and the world.

EDIT: Lesson learned, I should have waited a bit before publishing, because otherwise I would have included this incredible article by Andrew Jacobs in the New York Times making a very similar argument. I particularly loved (or was despondent over) this quote:

And Liao Jinzhong, an economist at Hunan University, worries that much of the spending is misplaced. “What we really could use is a functioning sewage system,” he said, speaking from his sixth-floor apartment in a crumbling faculty building that has no elevator.

This site is called Mes Aynak and is nothing short of awe-inspiring: a massive walled-in Buddhist city featuring massive temples, monasteries, and thousands of Buddhist statues that managed to survive looters and the Taliban. Holding a key position on the Silk Road, Mes Aynak was also an international hub for traders and pilgrims from all over Asia.

Hundreds of fragile manuscripts detailing daily life at the site are still yet to be excavated. Beneath the Buddhist dwellings is an even older yet-unearthed Bronze age site indicated by several recent archaeological findings.

Mes Aynak is set for destruction at the end of December 2012. All of the temples, monasteries, statues as well as the Bronze age material will all be destroyed by a Chinese government-owned company called China Metallurgical Group Corporation (MCC). Six villages and the mountain range will also be destroyed to create a massive open-pit style copper mine.

The $3 billion mining deal, signed in 2007, represents the largest foreign investment in Afghanistan’s history.

But the mining deal and Zhou Yongkang’s surprise visit is emblematic of a few things relevant to Chinese foreign policy in Central Asia, and the developing world in general. China’s interests in Afghanistan and the rest of Central Asia involve: co-opting corrupt, crony capitalist elites in neighboring authoritarian states so that Chinese state-owned corporations (and Chinese workers, protected by armed Chinese security guards) can extract resources; developing alternative supply chains to the Persian Gulf-Indian Ocean-Malacca Straits shipping route, especially by building oil pipelines from Kazakhstan into Xinjiang; and cooperating with said Central Asian states (especially through the Shanghai Cooperation Organisation) to fight terrorism aimed at splitting Xinjiang from China. China’s interests in Africa and other parts of the developing world are similar, minus the fighting terrorism part.

The U.S. and other interested partners need to work more actively to call out not only China’s abusive actions in the developing world, but also this obvious contradiction in China’s foreign policy. China is particularly weak ideologically on this front, given that its policy of non-interference aims to thwart others who would interfere in China’s own internal affairs. Forcing China to explain its actions and apparent hypocrisy would:

Improve the competitive advantage of U.S. corporations in bidding against Chinese SOEs. If U.S. corporations can present themselves as environmentally-friendly and ethically/socially-responsible in an environment where developing countries are pressured to value those things, then they can win contracts even when Chinese SOEs underbid them. This could possibly improve the U.S. domestic economy (unless most profits are held overseas).

Generally improve U.S. relations with the developing world, and set up a stark contrast between U.S. and Chinese actions in the minds of the Global South. U.S.-China relations are not necessarily zero-sum, but in Africa and elsewhere, every resources-for-infrastructure deal the Chinese sign is a deal not made by the U.S.. The Chinese, with the help of locally-based state-owned media such as Xinhua and CCTV, are telling one narrative to the populations of their trading partners. We can tell a different narrative, especially if our actions respect the environment, improve the local economy, and maintain local culture.

And possibly (however unlikely), push China to revise its stated foreign policy to align with its actual practices, which would remove the ideological pretense behind its arguments on a whole host of issues, including humanitarian interventions, territorial disputes, and U.S. policies in East Asia.

The U.S. should use the U.N. as an outlet and work with human rights and minerals-certification NGOs, but it must also speak to the American domestic audience. Mark Landler’s recent piece in the New York Times describes the Obama administration’s tougher stance on China, especially in regards to US-China trade and the Pivot to Asia. The Obama administration needs to add this issue to the growing list of arguments made in front of domestic audiences, because average Americans can also play a pivotal role in an influence campaign (and it would of course also improve President Obama’s reelection chances).

Even if China doesn’t revise its foreign policy wholesale (which again, is nigh impossible in the short term), the U.S. can advance its interests in credible and measurable ways. Not to call China out on its hypocrisy abroad would be a huge missed opportunity.

Dr Zheng believes that the leaders who promote a nationalist discourse are not driven simply by a cynical search for legitimacy. He argues the top Chinese leadership has internalised nationalist views – and the rather paranoid opinion of foreign powers that goes along with them. In a fascinating passage, he quotes extensively from leaked discussions held among the country’s leaders, in the aftermath of the Nato bombing of China’s embassy in Belgrade in 1999. Even in private, none of the leaders accepted America’s explanation that the bombing had been an accident – all saw it as a deliberate challenge to Chinese national honour, and some saw it as a plot to provoke and undermine China.

This from the Financial Times, reviewing Never Forget NationalHumiliation,by Zheng Wang of the Whitehead School. The existence of the “Century of Humiliation” in the national political discourse is obvious to any observer of China. It is to some extent “true” (however one defines that term–although it of course does not define the modern international system), and it seems a natural reaction by the political elite to the perceived sense that the CCP is losing legitimacy after the evaporation of any cohesive ideology and elimination of the Cult of Mao. What else could credibly replace socialism or rationalize the continuing necessity of CCP rule? It is one tool in the vast array of propaganda and educational materials available to the CCP. I had previously thought, as the article mentions, that of course the CCP elite understands the “Century of Humiliation” merely as a tool to preserve both their institutional political power and personal perquisites.

But if the CCP elite believe it writ large? Then the U.S., and really the world, have some serious problems on their hands. If this is true, there can be no set of arguments in favor of China’s ultimate integration into the current internationalist system that would convince the Chinese. If this is true, what you read in the Global Times and in incendiary PLA publications really do reflect what the Chinese leadership thinks. Of course, there are many examples to the contrary: most famously, Zheng Bijian, and indeed, many official statements coming out of the mouths of Hu Jintao and Wen Jiabao.

I will have to read the book itself to get a more thorough understanding of the argument (and I would like to know how the author got leaked politburo discussions following the Belgrade bombing–maybe the same source as the Tiananmen Papers?). Even taking the point at face value, like any political system, it is impossible to conceive of the CCP in monolithic terms–there are factions of leftist conservatives and liberal reformers, cultural internationalists and nativist reactionaries. But if accurate, this argument might truly represent a profound ideological undercurrent driving US-China conflict, one that, even if not shared by all Chinese leadership, can do significant damage to prospects for peace if propagated through internal CCP training, rectification, “struggle sessions,” and self-criticism.

Wang Yang said that everyone who is unwilling to try, who is unwilling to make a thrilling leap are just like a frog that boils when the temperature of the water is not high. If we wait for sober action, then there will already be no way out. Wang Yang stressed that reform is the fundamental way out. Facing the difficulties of reform, we shouldn’t be afraid of any risks nor confused by any obstructions, but must continue with utterly fearless courage on the path of socialist market reform, and not at all waver from our advances on every kind of reform.

With the coming onset of recession in China, the most important question to ask is: is it cyclical or structural? All answers currently point to structural. In fact, a slightly lower growth rate that comes with massive structural changes to the economy is a good thing and much more sustainable in the long-term. The next question to ask is whether those structural changes are even happening and if so whether they are succeeding. In that vein, here are the most important questions relevant to the coming Chinese structural economic shift:

Will more rounds of infrastructure stimulus be effective?

What is the liability of local government debt?

How does China liberalize capital accounts without a replay of the late-90’s Asian crisis or large-scale capital flight from well-off Chinese/corrupt CCP officials?

What mix of policies gets China to higher domestic consumption?

How big of a drag on the economy are negative externalities like the environment?

How is China meeting its current and future energy needs?

Final bonus question: is the CCP implementing responses to these challenges?